Are virtual cryptocurrency trading platforms considered gambling when cash is involved?

UPDATED: Oct 1, 2022

Advertiser Disclosure

It’s all about you. We want to help you make the right legal decisions.

We strive to help you make confident insurance and legal decisions. Finding trusted and reliable insurance quotes and legal advice should be easy. This doesn’t influence our content. Our opinions are our own.

UPDATED: Oct 1, 2022Fact Checked

Get Legal Help Today

Compare Quotes From Top Companies and Save

secured lock Secured with SHA-256 Encryption

Are virtual cryptocurrency trading platforms considered gambling when cash is involved?

I am looking into starting a website and have some concerns it might be considered gambling. The website is a cryptocurrency trading platform that uses virtual funds but does have cash games that accept fees and distribute some of the fees collected to winners of the competition. Is that considered gambling?

Asked on May 12, 2019 under Business Law, Alaska


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

Games that accept fees and distribute some of the fees to winners is gambling IF there is any chance involved. For there to be gambling, there must be--
1) "Consideration," or something of value offered in exchange for the opportunity to participate;
2) An outcome determined by factors beyond an individual's player's control or "chance"--e.g. if there is any random element or chance at all involved in the outcome of games, including in the initial set up of them that then influence player strategy (e.g. in a first person shooter game, if the positioning of weapons or treasure in a game is random, as compared to a player's starting position); and
3) A "prize"--something of value the winner(s) get.
There is definitely elements 1) and 3) in what you describe. So the issue is: is there any chance at all? To analogize: even though poker and backgrammon require skill, because there is chance (the draw of cards;  the roll of the die), paying money to play them with a chance of winning a prize is gambling. A chess tournament is not gambling, because there is no chance whatsoever: it is 100% skill.
So the nature of the games involved will determine if this is gambling or not.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

Get Legal Help Today

Find the right lawyer for your legal issue.

secured lock Secured with SHA-256 Encryption